Iran-China ties and India's Concern

GS2 #International Relations




The track laying programme for the 628 km long rail link between Chabahar and Zahidan last week sparked concerns that India was being excluded from the project. Iran has since clarified that it is not the case and India could join the project at a later stage. This keeps the door open for Ircon International Limited (IRCON) which has been associated with the project even as India continues with the development of Chabahar port. 

  • Also, China and Iran are close to sealing an ambitious deal on an economic and security partnership, a move that has caught the attention of policymakers in India and across the world. It will facilitate the infusion of about $280 billion from Beijing, which wants to buy oil from cash-strapped Iran. 
  • China will also invest $120 billion into Iran’s transport and manufacturing infrastructure, thus giving it inroads into major sectors in Iran including banking, telecommunications, ports and railways. Iran is already a signatory of China’s Belt and Road Initiative (BRI), and this is in line with China’s “debt-trap diplomacy”. The deal has come under criticism from Iran’s political actors, including former President Mahmoud Ahmadinejad.


Iran-China So far

Ancient Times

  • Relations between Iran and China date back to 200 BC when civilisational contact was established between the Parthian and Sassanid empires (in present-day Iran and Central Asia) and the Han, Tang, Song, Yuan and Ming dynasties. When the Kushan empire since the first century, with Kanishka at its helm, became the crossroads for Sino-Indian Buddhist transmissions, many Iranians were translating Sanskrit sutras into Chinese.
  • Fourteenth-century Chinese explorer Zheng He, a Ming dynasty navy general, came from a Muslim family — legend has it that he may have Persian lineage — and sailed through India and Persia. Relics from his journey include Chinese-Tamil-Persian inscriptions.
  • In 1289, Mongol emperor Kublai Khan established a Muslim university in Beijing, where Persian works were translated into Chinese.
  • As countries with historical contacts, Iran and China view each other as successor states to civilisational empires. Both share a sense of past humiliation in the hands of foreign players.


Modern diplomacy

  • Modern-day diplomatic ties between Iran and China are just about 50 years old. China was invited to the 2,500-year celebration of the Persian Empire in October 1971.
  • In the 1970s, the ties were lukewarm, since the Shah of Iran Mohammed Reza Pahlavi was close to the US. China’s topmost leader Hua Guofeng (1976-81) — who became the chief of Communist Party of China after Premier Zhou Enlai and Chairman Mao Zedong — was one of the last foreign leaders to visit the Shah in August 1978, before he was overthrown in 1979. The visit is said to have left a very strong negative sentiment about China among Iranians. After Shah was overthrown during the Islamic Revolution in 1979, China was quick to recognise the new government.
  • The next test of Sino-Iranian ties came during the Iran-Iraq war (1980-88). With Iran deprived of weapons from western countries, it turned to China. Behind a facade of neutrality, China obliged and the Iranian regime bought cheap, low-technology arms through intermediaries in Hong Kong and North Korea. China under Deng Xiaoping, which also sold arms to Iraq discreetly, signed arms contracts with Iran including for anti-ship missiles.


The nuclear programme

  • Coincidentally, June 3-4, 1989 marks a landmark for China and Iran. The Tiananmen Square incident coincided with the death of the Islamic Republic’s founder, Ayatollah Khomeini. China suffered global censure and western sanctions, and Iran consolidated its theocracy under its new leader Ali Khamenei. 
  • Through the 1980s and ’90s, China provided direct assistance to Iran’s nuclear and missile development programmes. After a 1997 commitment to US President Bill Clinton by Chinese President Jiang Zemin, China stopped further assistance to the programme and sales of complete missiles, but Iran by then had progressed sufficiently to carry on.
  • While support to Iran continued under the radar, China was forced to take a position in June 2010 at the UN Security Council against the Iranian nuclear programme after the International Atomic Energy Agency flagged violations. UN sanctions on Iran followed.
  • That changed Iran’s behaviour over the next few years, and the P-5+1 (permanent members of the UNSC & Germany) countries negotiated the nuclear deal with Iran in 2015.
  • With the US under the Trump administration walking out of the nuclear deal with Iran in 2018, China has moved in to negotiate broader and deeper ties with Iran. It had sown the seeds in 2016 itself, when the rest of the world, including India, had started engaging with Iran — PM Narendra Modi went to Tehran in May 2016.
  • Today, both China and Iran see the Western Pacific and the Persian Gulf as regions of contestation with the US.


India-Iran ties: 

Cultural relations: 

  • The Persian language and culture fired the cultural renaissance at the Mughal court. Thus, India is important for Iran for its religo-cultural heritage.
  • Connect between Shias in J&K and Kargil with Iran: Students from these places travel to Qom in Iran, which is considered the largest Shia scholarship centre in the world. 
  • India and Iran established diplomatic links on March 15, 1950. 


India-Iran strategic convergence in the 1990s

  • But warmth in relations came after Kabul fell to the Taliban in 1996. Prime Minister P V Narasimha Rao visited Iran in September 1993 — the first Indian PM to do so since the Islamic Revolution in 1979. 
  • In April 1995, In the first visit by an Iranian head of state since the Islamic Revolution. 
  • In 2003, Iranian President Khatami was the chief guest at India’s Republic Day and a New Delhi Declaration was issued. 
  • The two countries have in place Bilateral Consultative Mechanisms at various levels which meet regularly. 


International cooperation: 

  • In 1995, when India was facing diplomatic isolation from the Muslim world due to the Babri Masjid demolition a state visit by then-Iranian President Ali Akbar Hashemi Rafsanjani helped smooth the relationship. 
  • Also in 1995, Iran had abstained from voting, stopping the OIC from building a consensus when the Organisation of the Islamic Conference (OIC, now renamed the Organisation of Islamic Cooperation) was successful in pushing a resolution at the UN Commission on Human Rights (now replaced by the UN Human Rights Council) to condemn India for violations in Kashmir.
  • New Delhi approved a proposal from Iranian private lender Bank Pasargad to open a branch in Mumbai for reviving the rupee-rial arrangement it has used in the past for importing oil from Iran in wake of US threats of sanctions.


Mid-2003 to 2010: Downfall in relations

  • The slip in the bilateral relations was due to Iran’s clandestine nuclear programme and assistance from Pakistan’s rogue scientist A Q Khan. 
  • Iran had criticised India on the issues of the Babri Masjid demolition, 2002 Gujarat riots and Kashmir.
  • This was in the backdrop of Iranian concerns over the Indo-US civil nuclear deal; 
  • In 2008 and 2009, India had voted against Iran in the International Atomic Energy Agency.
  • The Taliban had been ejected from Afghanistan and US troops literally surrounded Iran, having in 2003 overthrown Saddam Hussein. 


2010-2016: Iran nuclear deal and warmth in Indo-Iran relations

  • Tackling ISIS: Calculating that without Iran, ISIS could not be countered, the US in 2015 endorsed the nuclear deal that P-5 and Germany negotiated to end the nuclear stand-off. 
  • The India-Iran relations returned to near normal as most US sanctions were lifted.
  • Prime Minister Modi visit: In 2016 a Trilateral Agreement on Transit and Transport was signed between India, Iran and Afghanistan during PM Modi’s visit


2016 and beyond: downfall in bilateral relations

  • Iran began extending its influence and role across Iraq and West Asia. 
  • USA’s maximum pressure policy: President Donald Trump in 2016 reversed US policy and since then “maximum pressure” has been applied on Iran via tightened sanctions. 
  • This has deepened the Shia-Sunni split along with  Sunni-Sunni split as Qatar and Turkey are with Iran.
  • Sanctions on Iranian oil purchases were reimposed as part of Trump’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA). India cut the import of Iranian oil.
  • PM Modi also moved to engage Saudi Arabia and the UAE.


Commercial Relations: 

  • The India-Iran bilateral trade amounts to USD 12.89 billion during the fiscal year 2016-17.
  • Major Indian exports to Iran: rice, tea, iron and steel, organic chemicals, metals, electrical machinery, drugs/pharmaceuticals, etc. 
  • Major Indian imports from Iran: petroleum and its products, inorganic/organic chemicals, fertilizers, plastic and articles, edible fruit and nuts, glass and glassware, natural or cultured pearls, precious or semiprecious stones, etc.
  • Indian Community in Iran comprises around 4000 Indian nationals. There are approximately 2800 Indian nationals undergoing theological studies in Qom, Mashhad and Esfahan.


On Connectivity

  • Connectivity projects for Afghanistan through Iran in order to lessen its dependence on Karachi port.
  • Chabahar port's proximity on Iran’s Makran coast to Kandla was ideal. 
  • India completed the 220 km road to connect Zaranj to Delaram on the Herat highway in 2008 at a cost of $150 million. 
  • The signing of the Joint Comprehensive Plan of Action or the Iran nuclear deal eased progress post-2015.
  • Memorandum of understanding (MoU) signed with Iran in 2016 to equip and operate two terminals at the Shahid Beheshti port as part of Phase I of the project. 
  • Signed the Trilateral Agreement on Establishment of International Transport and Transit Corridor between Afghanistan, Iran and India. 
  • In addition to $85 million of capital investment, India also committed to providing a line of credit of $150 million for port container tracks. 
  • Phase I declared operational in 2018 and India’s wheat shipments to Afghanistan have been using this route. 
  • Special economic zone (SEZ) at Chabahar was planned but re­imposition of U.S. sanctions has slowed investments into the SEZ. 
  • India was given a waiver from U.S. sanctions to continue cooperation on Chabahar as it contributed to Afghanistan’s development. Despite the waiver, the U.S. Treasury's delay in clearance slowed down the process. 

Railtrack Project

  • With regard to the rail­track project, a financing MoU was signed under which India undertook to provide $500 million worth of rolling stock and signalling equipment including $150 million of steel rail tracks. 
  • The railway tracks currently being laid are those supplied by IRCON. 
  • The MoU between IRCON and Iran’s Construction and Development of Transportation Infrastructures Company (CDTIC) expired last year. 
  • Further, Khatab al Anbiya, the Iranian company undertaking some of the works, was listed by the U.S. as a specially designated entity, leading IRCON to suggest to the Iranians to appoint another contractor. 


Plans on Mind

  • Iran has ambitious plans to extend the railway line from Zahedan to Mashad (about 1,000 km) and then another 150 km onwards to Sarakhs on the border with Turkmenistan. 
  • Another plan is to link it with the International North­South Transport Corridor towards Bandar Anzali on the Caspian Sea. 
  • In 2011, a consortium of seven Indian companies led by Steel Authority of India Limited had also successfully bid for mining rights at Hajigak mines in Afghanistan that contain large reserves of iron ore. However, developments at Hajigak remain stalled because of the precarious security situation in Afghanistan continues.


Why Iran needs China

  • Iran was reluctant to have close ties with China although the latter proposed a long-term strategy.
  • But tensions in the region attributed to U.S. and Israeli agencies. 
  • U.S. announced it wanted the UN Security Council (UNSC) to continue the ban on Iranian acquisition of conventional weapons. 
  • UNSC Resolution 2231 was adopted in July 2015 by consensus to endorse the JCPOA and contains a five­year restriction on Iran’s importing conventional weapons that end on October 18. 
  • Even though the U.S. unilaterally quit the JCPOA, it is threatening to invoke the automatic snapback of sanctions provisions of JCPOA. 
  • Under the threat of US sanctions, India has also 'zeroed out' its oil imports from Iran, forcing the Central Asian to change focus to its leather and agricultural sectors to rescue its ailing economy. 
  • Russia and China are the only countries to veto the U.S.’s moves in the UNSC. 
  • China has a greater capacity to resist U.S. sanctions compared to India 


Concerns for India and Way Forward

  • Oil dependency: For India, oil imports are key to sustaining its economic growth trajectory as they are needed to meet 80 per cent of energy requirements. Iran is the third-largest source of oil for India after Saudi Arabia and Iraq.
  • Access to Afghanistan and Central Asia: New Delhi also sees Iran as a conduit to Central Asia, a region that India considers strategically vital. India has invested in Chabahar port in Iran and highways that provide an alternative route to both Afghanistan and Central Asia, bypassing Pakistan.
  • Containing Pakistan and Taliban: After the recent US-Taliban agreement, India needs Iran on its side as the Taliban’s influence — and the Pakistan military’s influence — is on the rise in Afghanistan.
  • Iran is also positioning to play the leadership role in the Islamic world, with Saudi Arabia and the UAE perceived to be close to the US. 
  • India’s Middle East Policy shift: Earlier India’s Middle East policy has traditionally tried to balance the three poles in the region: the Arab Gulf states, Israel and Iran. But now India is being seen as more friendly with the Saudis, Israelis and Americans which is disliked by Iran. 
  • India has also grown increasingly close to Israel, a country that is the source of vital military equipment for India, but which is also engaged in severe competition with Iran.
  • Instability in the Gulf region: India’s immediate challenge in an event of escalation in the Gulf of Oman would be international crude prices.
  • India’s closeness with the USA: The United States itself is an increasingly vital partner for India. This is disliked by Iran.
  • India needs to improve its implementation record of infrastructure projects that it has taken up in its neighbourhood.
  • The Chabahar port is viewed as critical to the expansion of trade relations with Central Asian nations, offering a much-coveted alternative to Pakistan's Gwadar port. Within the context of India's adversarial relationship with Pakistan, India had long sought alternative trade routes to access new markets. So it is in India's interest to follow up.
  • There are numerous tales of Indian cooperation projects in Nepal, Bangladesh, Sri Lanka, Myanmar, etc suffering delays and cost overruns that only make it easier for China to expand its footprint in India’s neighbourhood. 
  • The key is to continue to remain politically engaged with Iran so that there is a better appreciation of each other’s sensitivities and compulsions.



Source: The Hindu, The Indian Express, The Print, Wikipedia


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